Benefit Plan Voluntary Correction Programs: Properly Correct Errors and Minimize Penalties

Lorman Education Services

Learn how to properly correct errors on your company's qualified retirement plans and minimize penalties.

Many companies provide qualified retirement plans such as 401(k) and pension plans to their employees to assist individual employees with planning and preparing for retirement. In order to preserve the tax benefits that qualified retirement plans can provide participants, it is important that the retirement plans are maintained in accordance with tax law requirements, but such retirements are complicated and constantly changing. Despite the best efforts of employers, mistakes can occur in the administration and operation of qualified retirement plans - putting in jeopardy the tax benefits plan participants are expecting.

Fortunately, there are correction mechanisms available when mistakes occur. The Internal Revenue Service has established a program, known as the Employee Plans Compliance Resolution System, or EPCRS, that permits employers to voluntarily fix plan errors and avoid costly penalties imposed by the IRS or worse, the loss of expected tax benefits to employees.

This topic will explain the EPCRS program and the different correction options. The material will discuss common retirement plan errors and pre-approved methods of correcting such errors. Finally, the topic will discuss tips and practices that can help avoid future retirement plan errors.

Learning Objectives

• You will be able to recognize the importance of correcting retirement plan errors.
  
• You will be able to identify common retirement errors.
  
• You will be able to explain how to correct common retirement plan errors.
  
• You will be able to discuss how to implement tips and practices to avoid future retirement plan errors.

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